Nepal to annul MoU with Indian consortium building Kathmandu-Nijgadh expressway

Kathmandu: Nepal has decided to terminate all memoranda of understanding (MoU) and decisions reached with an Indian consortium that was preparing to build the Kathmandu-Nijgadh expressway.

The Himalayan state was now preparing to build the project on its own as reported by the Kathmandu Post.

The 76 km long proposed highway had remained on the government's drawing board since 1991.

Representational image. Reuters

Attempts to award the project to the Indian consortium of Infrastructure Leasing and Financial Services (IL&FS) Transportation Networks, IL&FS Engineering and Construction, and Suryavir Infrastructure Construction, had drawn flak earlier, Minister for Physical Infrastructure and Transport Ramesh Lekhak told the parliamentary Finance and Development committees on Sunday.

"Without terminating the agreements and decisions reached in the past, it was impossible to move ahead, or build the project on our own," he said.

Lekhak's ministry is now planning to table a proposal to scrap all the agreements and understandings with the Indian developer at the Cabinet.

The Kathmandu-Nijgadh expressway which would cut travel time to an hour from the existing eight to 10 hours would be a public expressway where no toll would be levied, Lekhak told on Sunday.

The ministry was directed to settle issues related to the detailed project report (DPR) submitted by the consortium.

The developer had claimed that it had invested Rs 500-600 million for preparing the DPR.

Dhan Bahadur Tamang, secretary at the ministry, said a high-level committee was formed to sort the issue.

In 2014, the former Prime Minister Sushil Koirala-led government had made efforts to award the 100 billion-rupee-project to the consortium.

However, questions were raised over the Koirala government's intention to offer minimum revenue guarantee up to Rs 15 billion a year to the developer if traffic remained inadequate to generate profits.

Even the Supreme Court, on 8 October, 2015, had issued an interim order shelfing the project.